Britcoin and the Future of Cash: Bank of England's Commitment to Currency Diversity

Concerns Over Britcoin and the Future of Cash

As anxieties rise regarding the potential replacement of cash by Britcoin, the United Kingdom's central bank digital currency (CBDC), Andrew Bailey, the governor of the Bank of England (BOE), has assured that cash will continue to be provided “for as long as people want.” This statement was made during his address at the Group of Thirty’s 39th Annual International Banking Seminar.

Commitment to Cash Availability

Bailey emphasized the ongoing demand for cash, stating, “The evidence is they do want it [cash], so we will continue to supply it.” This sentiment echoes remarks made by Sarah Breeden, a seasoned member of the Bank of England, during her testimony before the Treasury Committee last year. Breeden asserted, “We will ensure that cash is available as long as it is demanded. We will ensure that the cash infrastructure in the financial system is there as long as it is demanded – cash and digital money are choices.”

Divided Opinions on CBDC

Since the concept of a CBDC was proposed several years ago, opinions among lawmakers and the public have been polarized regarding its advantages and disadvantages. Proponents of Britcoin argue that it has the potential to lower costs and mitigate risks. In contrast, critics express concerns that it may enable government surveillance of individual spending and ultimately replace cash.

Development of Digital Currency

The Bank of England began designing a digital version of the pound in January of this year. However, a decision on whether to officially launch it has not yet been made. Bailey has indicated support for a wholesale CBDC intended for banks, while he remains cautious about introducing a retail CBDC. He pointed out that it is “harder to see an anchor role for central bank money” in retail CBDC. Conversely, a wholesale CBDC could fulfil a “special role” in high-value payments and the settlement of payment systems.

Innovation in Digital Payments

Bailey further mentioned that the BOE is developing a retail CBDC to foster innovation. He believes that making CBDC innovation accessible to the private sector will encourage commercial banks to modernize the digital payments landscape. According to Bailey, banks currently lack sufficient motivation to enhance efficiency in specific areas, such as cross-border payments, which he noted “inhibits innovation.” He emphasized the necessity for improved digital systems in cross-border payments, where advancements in modernization have been notably sluggish.